The Value of Clean Air in High Density Urban Areas

High-Rise Building Living in Asian Cities, First Edition, (A G O Yeh and B Yuen ed.), Springer Verlag, 113-128

23 Pages Posted: 14 May 2012 Last revised: 12 Nov 2012

See all articles by K.W. Chau

K.W. Chau

The University of Hong Kong - Ronald Coase Centre for Property Rights Research - Economics

Siu Kei Wong

University of Hong Kong

Andy Chan

affiliation not provided to SSRN

K. Lam

affiliation not provided to SSRN

Date Written: February 10, 2009

Abstract

We estimate the market value of clean air by examining the impact of air pollution on property prices. We use a three-dimensional Reynolds-stress turbulence model to simulate the air pollution level of each housing unit in high-rise buildings located in a small, densely populated area of Hong Kong (Study Area) and then verify the simulated results with site measurement data. The Study Area has two important features that make our investigation feasible:1) the variety of building forms and street locations resulted in significant variations in air quality across housing units and 2) the housing units are actively traded in the market and their property attributes are relatively homogenous. We estimate the implicit price of air quality by constructing a hedonic price model that includes the simulated housing unit-specific air pollution level as one of the explanatory variables. We found that the level of air pollution, as measured by respirable suspended particulates, has a significant negative impact on housing prices. Our results also suggest that the willingness to pay for clean air increases with air pollution levels and the value of a housing unit.

Keywords: Air pollution, hedonic price model, Hong Kong, property prices

JEL Classification: Q21, C10, H40, I12, Q25, R22

Suggested Citation

Chau, Kwong Wing and Wong, Siu Kei and Chan, Andy and Lam, K., The Value of Clean Air in High Density Urban Areas (February 10, 2009). High-Rise Building Living in Asian Cities, First Edition, (A G O Yeh and B Yuen ed.), Springer Verlag, 113-128, Available at SSRN: https://ssrn.com/abstract=2057515

Kwong Wing Chau (Contact Author)

The University of Hong Kong - Ronald Coase Centre for Property Rights Research - Economics ( email )

Ronald Coase Centre for Property Rights Research
Pokfulam Road
Hong Kong
Hong Kong
(852)28592128 (Phone)
(852)25599457 (Fax)

Siu Kei Wong

University of Hong Kong ( email )

Pokfulam Road
Hong Kong, HK
China

Andy Chan

affiliation not provided to SSRN

K. Lam

affiliation not provided to SSRN

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